Correlation Between Vistra Energy and DS Smith
Can any of the company-specific risk be diversified away by investing in both Vistra Energy and DS Smith at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vistra Energy and DS Smith into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vistra Energy Corp and DS Smith PLC, you can compare the effects of market volatilities on Vistra Energy and DS Smith and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vistra Energy with a short position of DS Smith. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and DS Smith.
Diversification Opportunities for Vistra Energy and DS Smith
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vistra and DITHF is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and DS Smith PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DS Smith PLC and Vistra Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vistra Energy Corp are associated (or correlated) with DS Smith. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DS Smith PLC has no effect on the direction of Vistra Energy i.e., Vistra Energy and DS Smith go up and down completely randomly.
Pair Corralation between Vistra Energy and DS Smith
Considering the 90-day investment horizon Vistra Energy Corp is expected to under-perform the DS Smith. But the stock apears to be less risky and, when comparing its historical volatility, Vistra Energy Corp is 1.0 times less risky than DS Smith. The stock trades about -0.02 of its potential returns per unit of risk. The DS Smith PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 625.00 in DS Smith PLC on September 12, 2024 and sell it today you would earn a total of 106.00 from holding DS Smith PLC or generate 16.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vistra Energy Corp vs. DS Smith PLC
Performance |
| Timeline |
| Vistra Energy Corp |
| DS Smith PLC |
Vistra Energy and DS Smith Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vistra Energy and DS Smith
The main advantage of trading using opposite Vistra Energy and DS Smith positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy position performs unexpectedly, DS Smith can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in DS Smith will offset losses from the drop in DS Smith's long position.| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy vs. NRG Energy |
| DS Smith vs. Sealed Air | DS Smith vs. Eastman Chemical | DS Smith vs. Sensient Technologies | DS Smith vs. Ecolab Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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